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Employers make decisions every day that affect people’s careers. They choose who to promote, how bonuses are allocated, which roles are made redundant and whether an employee’s performance meets expectations. Not every disappointing decision amounts to unlawful discrimination; a business can restructure a department or appoint another candidate.
However, describing a decision as ‘commercial’ does not automatically make it lawful. At Nationwide Employment Lawyers, we often speak to professionals who have been told that a decision was based on performance, cost or business need, yet the explanation does not match the surrounding facts. Previous reviews may have been positive, the criteria may have changed without warning or colleagues in comparable positions may have been treated differently.
The important question is whether the decision was genuinely based on a lawful business reason or whether a protected characteristic influenced the outcome.
When Does an Unfair Decision Become Discrimination?
A workplace decision is not automatically discriminatory simply because it seems unreasonable. For treatment to amount to unlawful discrimination under the Equality Act 2010 (EqA), it must be connected to a protected characteristic, such as:
- Gender
- Age
- Race and Nationality
- Ethnic or National Origins
- Sexual Orientation
- Disability
- Pregnancy and Maternity
- Marriage and Civil Partnership;
- Religion and Belief
Discrimination can affect every section of UK employment, from recruitment, promotion, pay and bonuses to restructuring, redundancy and dismissal. The legal test depends on the reasoning behind the behaviour. A business justification may be relevant to some claims but will not provide a defence to every form of discriminatory treatment.
Direct Discrimination
Section 13 of the EqA states that direct discrimination occurs where one person treats another less favourably than they treat others ‘because of a protected characteristic’. For example, an employer might refuse to promote a female executive because they assume she will have children, or they might remove a professional from client-facing work because of their race.
In most direct discrimination claims, an employer may defend the treatment by arguing that it was commercially convenient, beneficial to the business or preferred by its clients. However, direct discrimination cannot generally be objectively justified, and a supposedly commercial advantage will not make the decision lawful.
Direct age discrimination is an exception. Different treatment because of age might be lawful if the employer proves that it was ‘a proportionate means of achieving a legitimate aim’. The protected characteristic does not have to be the employer’s only reason for its decision. The issue is whether it had a significant influence on the less favourable treatment.
What Does a Genuine Business Decision Look Like?
A lawful business reason might explain why an employee was treated unfavourably. For instance, an employer might promote another candidate because they have more relevant experience, reduce a bonus because defined targets were not met, or restructure a department because work has declined.
An employment tribunal will not accept the employer’s reason for the decision without examining the evidence. It will consider whether the reason is supported by documents and whether the explanation remained consistent throughout the process. They might look more closely at a decision where:
- No clear criteria were used
- The criteria changed after the process began
- Previous performance reviews contradict the explanation
- Colleagues in comparable positions were treated differently
- Normal procedures were not followed
- Discriminatory remarks were made
- The employer’s explanation changed
A genuine business decision should be supported by credible evidence and consistent reasoning. A vague reference to ‘business needs’ often is not enough where the surrounding facts point in another direction.
Indirect Discrimination
Indirect discrimination can be less obvious because the employer may apply the same rule to everyone. Section 19 of the EqA covers an employer applying a ‘provision, criterion or practice’ that places people with a protected characteristic at a particular disadvantage compared to others. Examples might include:
- Requiring every senior employee to work late each evening
- Insisting that all roles must be performed full-time
- Requiring extensive travel at short notice
- Applying a minimum length-of-service requirement
- Requiring employees to work permanently from one location
The employer may not have intended to discriminate. However, intention is not required for an indirect discrimination claim. The only way an employer may be able to defend the rule is by showing that it was a proportionate means of achieving a legitimate aim.
What is Objective Justification?
Objective justification is the legal test used to decide whether certain forms of discrimination may be lawful. It is most commonly relevant to indirect discrimination, but can also occur in direct age discrimination and claims involving discrimination arising from disability.
The employer must first identify a legitimate aim. Depending on the circumstances, this might include protecting health and safety, maintaining service levels or meeting a genuine operational requirement. This aim must be real and non-discriminatory. Then, the employer must show that the action taken was proportionate. This involves balancing the importance of the business aim against the discriminatory impact on the employee.
An employment tribunal will consider whether the measure was reasonably necessary and whether a less discriminatory alternative was available. For example, an employer might need senior staff to provide cover outside normal working hours. However, requiring every executive to stay late every evening might not be proportionate if a rota or remote working arrangement could meet the same need. Having a legitimate objective does not automatically justify the method chosen to achieve it.
Can Cost Justify Discriminatory Treatment?
Financial considerations can form part of an employer’s explanation, but saving money alone will not provide a legitimate aim. An employer cannot usually justify their behaviour by simply arguing that the discriminatory option was cheaper. The Equality and Human Rights Commission explains that an aim which is simply to reduce costs because it is cheaper to discriminate will not be legitimate.
Cost might still be relevant as part of a wider objective, such as responding to genuine financial pressures or making effective use of limited resources. An employment tribunal will consider whether the claimed financial pressure was supported by evidence, whether alternatives were explored and how serious the disadvantage was for affected employees.
Can Performance Management Be Discriminatory?
Employers are entitled to set reasonable standards and address genuine performance concerns. However, performance management can become discriminatory where it is applied selectively or used to disguise another reason for the treatment.
Warning signs can include vague criticism, unexpected changes in expectations, impossible targets or scrutiny that is not applied to comparable roles. Timing can also be important. A professional who receives positive feedback for several years but this suddenly changes after disclosing a disability or returning from maternity leave may question the explanation.
Can a Genuine Restructure Still Be Discriminatory?
A restructure can be commercially genuine but still be carried out in a discriminatory way. An employer might have a lawful reason to reduce costs; however, discrimination can arise through the selection pool, the scoring criteria or appointments made to roles within the new structure.
An employment tribunal will question the process where only one person’s role appears to be affected, a very similar position is created afterwards, or the selection criteria seem designed around a preferred candidate. Comments about age, health, maternity leave or retirement may also be relevant, particularly when made close to the decision. A real business reorganisation does not excuse discriminatory selection.
How is Discrimination Proved?
Direct evidence of discrimination is relatively rare. Employers do not usually record that a decision was made because of someone’s protected characteristic. Claims are often built from the surrounding facts, and evidence can include the timing of the decision, inconsistent explanations, and differences in how comparable employees were treated.
Section 136 of the EqA addresses the burden of proof. Where there are facts from which an employment tribunal could decide, in the absence of another explanation, that discrimination occurred, they must find that the EqA was breached unless the employer shows otherwise. This does not mean that making an allegation automatically transfers the burden of proof to the employer. The employee must first present sufficient facts about discriminatory behaviour.
from which discrimination could reasonably be inferred.
What Evidence Should You Keep?
If the employer’s initial explanation does not appear credible, keep a clear and accurate record of events. Useful evidence includes:
- Emails and messages
- Performance reviews
- Promotion or bonus criteria
- Notes of relevant meetings
- Restructuring documents
- Grievance correspondence
- Examples of how colleagues were treated
A written timeline can be particularly useful when the employer’s explanation changes or several connected events have taken place over a longer period.
Making a Workplace Discrimination Claim
It is not always easy to distinguish between unlawful discrimination and a legitimate business decision. An employment tribunal will consider how the decision was reached, whether the explanation is supported by evidence, how other employees were treated and whether a protected characteristic influenced the outcome. Where objective justification is relevant, they also consider whether the employer had a genuine legitimate aim and whether its chosen approach was proportionate.
At Nationwide Employment Lawyers, we advise senior professionals on discrimination involving promotion, pay, bonuses, restructuring, performance and dismissal. We can help you understand whether a decision may be unlawful, how to raise your concerns and what steps may be available. Please contact us today if you believe a supposedly commercial decision may have been influenced by discrimination.
